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London Forex Report: Hurricane Effect Sends NFP’s Negative

London Forex Report: Hurricane Effect Sends NFP’s Negative

London Forex Report: The hurricane-impacted US labour market report last Friday – nonfarm payrolls fell 33k (ending a seven year cycle of gains) with a 2-month revision of -38k, yet the unemployment rate fell to a fresh 16-year low of 4.2% and average hourly earnings rose 2.9% YoY (+0.5% MoM). UST bond yields climbed as market players focused on the latter data and increased the probability of a third FOMC rate hike by December. Meanwhile, North Korean geopolitical tensions ratcheted higher as US president Trump threatened that “only one thing will work!” amid talk of another missile test that is said to be capable of reaching the US West Coast. Separately, U.S and Turkey also suspended visa services for visitor arrivals, and final New Zealand election results over the weekend also showed both main parties, the ruling National Party and Labour-Green opposition with 56 and 54 seats respectively could form viable coalitions ahead of the 12 October deadline.

NORTH AMERICA Fed speaks were mixed; key officials sounded less upbeat on inflation and more cautious on communicating a Dec hike. Summarising the key points; New York Fed President Dudley said that “it is still appropriate to continue to remove monetary policy accommodation gradually” even as inflation is below the Fed’s target. Dallas Fed President Kaplan was more cautious, stating that he was “open minded about Dec (hike)” though not fully committed to one. St. Louis Fed President Bullard went further to suggest that Dec meeting will be “too early to “make a determination on whether inflation is coming back”, adding that he was concerned that the Fed “might make a policy mistake” in its “zeal to normalise” policy.

EUROPE This week, expect central bank/official rhetoric to potentially guide the markets all thorough the week. ECB-speakers kick off today with Lautenschlaeger and includes Praet on Wednesday and Draghi on Thursday. UK house prices bested estimates with a 0.8% MoM increase in Sept though overall remains a slowdown from 1.5% gain in August, affirming recent data that showed cooling in the hot UK property sector.

ASIA The leading index of Japan climbed to 106.8 in August preliminary release, up from 105.2, indicating an improving outlook going forward amid quicker growth in a collection of indicators that include new job offers, new machinery orders and consumer confidence. Meanwhile, the coincident index also climbed in August early print, rising to 117.6 from 115.7 in July, adding to signs of pick-up in growth amid firmer industrial production, large industrial power consumption, retail sales value, and operating profits across industries, amongst others.

Technical: 1-3 Day View – Range support 1.1830/60 now becomes resistance the break below 1.18 concerns the bullish bias and opens the way for a test of pivotal 1.1660, near term upside hurdle sited at 1.1794

Technical: 1-3 Day View – Price now testing trend support at 1.3060 , near term resistance is sited at 1.3160 the break below 1.31 concerns the broader bullish bias opening the potential for a test of 1.2910.

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.2770 would jeopardise the bullish advance.Retail Sentiment: NeutralTrading Take-away: Neutral

Technical: 1-3 Day View – Near term support is sited at 112.30 as this area attracts bids expect a test of offers over 113.50 the next upside objective expect profit taking on the first test, only below 109 concerns near term bullish bias.

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnetRetail Sentiment: BearishTrading Take-away: Long

Technical: 1-3 Day View – Breach of 133 supports delays a test of 136.10 as 133 now acts as resistance, expect a retest of 1.32/1.3150 support zone only below 131 concerns the bullish bias opening a move back to 129 base.

1-3 Week View – 136.10 is the principle upside objective as this area caps the current advance expect a retest of 131.50 to set a base for the next leg higher, only a closing breach of 127 concerns the bullish basis.Retail Sentiment: BearishTrading Take-away: Long

Patrick has been trading for the past ten years. After liquidating several accounts in his early days he stopped ‘gambling’ and applied himself as a student of risk. Self taught and more self aware thanks to Mr Market. Patrick applies simple technical strategies based around market price and time structure to identify high probability trade locations.